Here’s a sign that Toronto-based Shakudo has been building belief in its product: the software startup has managed to convert some of its customers to investors.
Shakudo achieved this through a $7-million USD Series A2 round that brought on new backers with close ties to some of its clients, which include Canadian grocery and pharmacy giant Loblaw and American healthtech company CentralReach, among others.
Christine Yuen,
“This represents significant validation—our customers believed in the product enough to become investors.”
Shakudo
Shakudo announced the fundraise on Tuesday. Closing the round, along with the launch of a new AI agent and offices in Silicon Valley and Bangalore, India, are just a few reasons Shakudo co-founder and CEO Yevgeniy Vahlis has been busy lately.
In an exclusive interview with BetaKit, Vahlis described the financing as “opportunistic inbound,” claiming that the AI infrastructure startup initially had no intention of fundraising again so soon after closing a $7.2-million USD Series A round in early 2023.
But when Shakudo was approached last summer by an investment firm and executives who had used the company’s product and believed strongly in it, Vahlis said Shakudo decided to take advantage of the market signal and advice they could provide by being on the company’s cap table.
Founded in 2021 by AI experts from Georgian Partners, Borealis AI, and BMO, Shakudo describes itself as “the operating system for AI.” The startup sells software designed to help companies quickly, cost-effectively, and securely deploy AI tools and products inside their existing digital infrastructure, using their data, without large developer operations teams.
Shakudo’s all-equity, all-primary Series A2 round closed in late October. It was led by Wittington Ventures, the tech-focused venture capital arm of the Weston family’s holding company, Wittington Investments, which controls Canadian grocery and pharmacy chains Loblaws and Shoppers Drug Mart. (Loblaw has been working to integrate AI lately, including by launching a shopping experience inside OpenAI’s chatbot, ChatGPT.)
RELATED: Shakudo closes $7.2-million USD Series A to help companies adopt AI
Fellow new investors, including CentralReach’s CEO Chris Sullens and former head of AI David Stevens, also personally invested in Shakudo as part of this round, alongside existing backers Golden Ventures, GreatPoint Ventures, and RTP Global.
This round adds Wittington Ventures managing partner Jim Orlando to Shakudo’s board and brings the startup’s total funding to approximately $18 million USD. Vahlis did not disclose the company’s valuation but claimed Shakudo got “a significant bump” relative to its Series A round.
“For us, this represents significant validation—our customers believed in the product enough to become investors,” Shakudo co-founder and chief architect Christine Yuen told BetaKit.
While this additional funding—much of which Shakudo plans to direct towards AI and computing costs—is “meaningful,” Vahlis argued that the round is “really about the partners.”
Shakudo allows clients to leverage leading AI tools while ensuring their most sensitive data stays in their control, Vahlis said. Over the past few years, Shakudo has established a strong presence among enterprises that provide “critical infrastructure” in areas like finance, healthcare, aerospace, defence, energy, logistics, and manufacturing.
Orlando told BetaKit that Wittington first encountered Shakudo a few years ago and introduced the startup to the Loblaw Digital team. He said Loblaw Digital was ultimately able to cut its six-month AI development cycles down to same-day delivery using Shakudo.
“Seeing these strong AI use-cases in action gave us conviction that Shakudo can become the default operating system for enterprise AI … so we bugged Yevgeniy and Christine until they let us lead this new round,” Orlando added.
Since the company’s Series A round in mid-2023, Vahlis claimed that Shakudo’s business has grown sevenfold. He declined to share the startup’s latest annual sales but claimed its revenue is “in the ballpark of a Series B company.” Vahlis said Shakudo intends to return to market to raise a larger Series B round in a year or two. While the startup is focusing on growth at the moment, Vahlis claimed that it remains capital-efficient, with a clear path to profitability.
The 35-person Toronto company plans to stay lean going forward, with strategic AI infrastructure and engineering hires across its second, Silicon Valley headquarters, and in Bangalore.
Following customer demand, Shakudo has also launched a new AI agent on its platform called Kaji. Vahlis says it is like a “top-tier engineer that knows everything about these tools and is also business-minded.”
Feature image courtesy Shakudo.